Monthly Archives: August 2014

our poor, huddled economic engines

This morning, the San Francisco Chronicle has a heartbreaking story about the thousands of immigrant children seeking asylum in our country. It’s been a contentious issue all summer, with angry protestors blocking buses carrying the children to holding centers.

I cringe when I see this kind of hatred directed at kids–and not just because I think it’s immoral for the richest country in the world to turn its back on people seeking a better life. There’s a much more practical, economic reason for my revulsion. Immigration is one of the main reasons, if not the main reason we became the richest country in the world–and continuing to welcome honest, hard working immigrants is the key to us staying that way.

The core problem with America’s immigration system is not that we let too many people in. It’s that we let too few in.

Continue reading


what’s legal is the real crime

In case you missed it, something unusual happened last week: a dishonest money manager went to prison.

Former hedge fund manager Larry Goldfarb was sentenced to 14 months in prison for pocketing $6 million from side pocket investments and diverting money for his personal use. I write about Goldfarb in my book (available for preorder here!). He was a prominent figure in the Bay Area investment world.  To his credit, he gave a lot of money to charity and worthy causes. Unfortunately, a lot of it wasn’t necessarily his to give. He was busted a couple of years ago and promised to repay his investors the money he took from his fund. But Larry couldn’t stop being Larry and now he’s going to federal prison because of it.

According to the federal prosecutor in charge of the case, “instead of paying the agreed upon restitution and disgorgement, Mr. Goldfarb spent hundreds of thousands of dollars on various personal indulgences, including Golden State Warriors season tickets, private air travel, and vacations.”

Mr. Goldfarb is a poster child for many people on Wall Street and in investment management:  smart, personable, and shamelessly unethical.  He is another example of why Wall Street, far more than corporate America, needs tighter regulation. But the truly disturbing part of Goldfarb’s career might not be the illegal stuff he was prosecuted for–it’s the legal activity one of his former employers practiced right out in the open.

Continue reading


don’t cry for us short sellers, but please save your hatred for someone who deserves it

Last week, I wrote a bearish article on Tesla for Seeking Alpha–not the company, the stock. As I said in the piece (and an earlier blog post), I admire Elon Musk and I think Teslas are neat cars. I’ve even considered buying one. But the company’s stock is another story. The logic of paying more than $200 a share for a barely cash positive business with all sorts of very large challenges ahead of it seems, well, stretched to me. And yet, people keep on buying. The article came out Monday morning, West Coast time. By the end of the day, Tesla was up another eight bucks. A few days later, Tesla beat on its Q2 earnings and the stock started pushing against its all time highs again. Correction? What correction?

Even though I clearly stated in my piece that I have no positions in the company, long or short, and no plans to initiate any positions in the future, several commenters accused me of secretly shorting Tesla and trying to drag its share price down. Unfortunately, this sort of vitriol is common. Short sellers are about as popular as personal injury lawyers and IRS agents these days. In the eyes of most investors, we’re little more than greedy vultures looking to smear good companies so we can profit on their fall. This simplistic, black hat-versus-white hat understanding of the financial world might be comforting, but it’s a dangerous fantasy.

In reality, the people waving the white hats and whipping this bull market higher are the ones investors should really be fearing–or at least questioning.

Continue reading